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Updated Sept. 21 to reflect the most recent Department of Labor jobless claims data.
The unemployment rate for August was 3.8% an increase from July, according to the jobs report released on Sept. 1 by the Bureau of Labor Statistics (BLS).
The new unemployment rate is now the highest since Feb. 2022, but it’s nothing to panic about. When you look at all of the factors in the jobs report, it's clear that this rate bump is largely due to an increase in labor force participation. That means more people were looking for work in August than in the prior month.
What are the weekly jobless claims?
Weekly jobless claims decreased for the week ending Sept. 16, according to the latest data from the U.S. Department of Labor. The weekly jobless claims, or initial claims, are the number of unemployment insurance claims filed in the past week. Claims are now at their lowest since January.
For the week ending Sept. 16, the seasonally adjusted weekly initial claims was 201,000 — a decrease of 20,000 in claims compared to the previous week’s revised level of 221,000, Labor Department data released on Sept. 21 shows. The new four-week moving average was 217,000, a decrease of 7,750 from the previous week’s revised average of 224,750.
The advance seasonally adjusted insured unemployment rate — the rate of continuous covered unemployment claims divided by covered employment — was 1.1% for the week ending Sept. 9, unchanged from the prior week's unrevised rate.
States with the highest insured unemployment rates, week ending Sept. 2:
New Jersey: 2.5%
New York: 1.9%
Puerto Rico: 1.9%
Rhode Island: 1.8%
States with the largest increases in initial jobless claims, week ending Sept. 9:
States with the largest decreases in initial jobless claims, week ending Sept. 9:
New York: -3,051
How many jobs were added in July?
The economy added 187,000 (nonfarm) jobs in July, compared to:
209,000 in June
339,000 in May
253,000 jobs in April
165,000 in March
248,000 in February
What is the current unemployment rate?
The current unemployment rate is 3.8%, a 0.3 percentage point increase from 3.5% in July. The rate is not dramatically different from unemployment rates during 2022. The number of unemployed persons in August was 6.4 million compared with 5.8 million in July.
Is unemployment rising or falling?
The unemployment rate has remained low and stable, fluctuating between 3.4% and 3.8% since Feb. 2022. It increased by 0.3 percentage points from July to August.
How to calculate the unemployment rate
The unemployment rate is calculated by dividing the number of unemployed people by the number of people in the labor force. (The labor force is considered the sum of those who are currently working or looking for work.) The result is then multiplied by 100 to get a percentage:
Number of unemployed people / Labor force x 100 = X%, which is the unemployment rate
What is the labor force participation rate?
In August, the labor force participation rate increased for the first time in six months from 62.6% to 62.8%, according to the Bureau of Labor Statistics. The latest rate is the highest since before the pandemic. The labor force participation rate is the percentage of the population that is working or looking for work.
The rate is calculated as the labor force divided by the total population that’s eligible to work. (The Bureau of Labor Statistics defines the total population that’s eligible to work as the “civilian noninstitutional population,” which refers to people ages 16 and older who are not in military service or incarcerated.) The result is multiplied by 100 to get a percentage:
Labor force / Civilian noninstitutional population x 100 = X%, which is the labor force participation rate
Since October 2002, the labor force participation rate was lowest in April 2020 (60.1%) and highest in June 2003 (66.5%), according to BLS data.
How is the job market right now?
In recent months, key labor market indicators — job openings, quit rate and layoffs — showed the tight labor market could be loosening slightly. But the latest data shows increases in job openings and declining layoffs demonstrating the resilience of the current labor market.
What does the Job Openings and Labor Turnover Summary report show?
The latest Job Openings and Labor Turnover Summary (JOLTS), released on Aug. 29 shows job openings are decreasing, to 8.8 million in July compared to the most recent previous periods:
9.6 million in June
9.8 million in May
10.1 million in April
9.6 million in March
9.9 million in February
10.8 million in January
11.2 million in December.
The job openings rate was 5.3% in July — a 0.5 percentage point decrease from June.
The number of job openings in July declined most in professional business services; health care and social assistance; state and local government excluding education; state and local government education; and federal government.
Job openings increased most in information, as well as transportation, warehousing and utilities.
The rate of layoffs stayed the same from June to July at 1.0%, according to the JOLTS report. There was little change in all industries.
What is the quit rate?
The JOLTS report shows the quit rate decreased from month to month: 2.3% in July compared with 2.4% in June. Economists say quit rates are a key factor in the health of employment prospects since quitting shows that workers feel safe making a job switch within their sector or outside it entirely.
The quit rate is now back to pre-pandemic levels after peaking at 3% in both Nov. 2021 and April 2022.
July quit rates decreased in accommodation and food services; wholesale trade; and arts, entertainment and recreation. The number of quits increased in state and local government education.
Are wages increasing?
Wages cooled in the second quarter of 2023, according to the most recent BLS Employment Cost Index, which measures wage and salary growth. The July 28 report shows compensation costs increased by 1.0% in the second quarter of 2023, compared with 1.2% in the first three months of the year.
But year-over-year measurements show a more significant downward trend: For the 12-month period ending June 2023, compensation costs increased 4.5%; the previous two quarters, when measured year-over-year, showed an increase of 4.8% (Q1 2023) and 5.1% (Q4 2022), respectively.
Wages and salaries as well as benefits comprise total compensation costs. For the 12-month period ending in June 2023, wages and salaries increased 4.6% compared with 5.3% in the 12-month period ending in June 2022. Meanwhile, benefit costs increased 4.2% over the previous 12 months compared to a 4.8% increase for the 12-month period ending in June 2022.
Will unemployment rise?
The labor market is still tight, but is also showing some signs of slackening and multiple forecasts are predicting job losses in the remainder of 2023.
The Federal Reserve hiked interest rates 11 times since March 2022 in an effort to bring down inflation, which is expected to eventually lead to a higher unemployment rate. On June 14, the Fed announced a pause on rate increases. It then raised the Fed rate in July.
The next jobs report will show data for September and will be released on Oct. 6.